JioCinema has made its foray into the Subscription Video on Demand (SVOD) space by launching JioCinema Premium, thus marking a milestone in its evolution. The platform, previously reliant on an AVOD revenue model, has now introduced a Rs 999/year subscription to provide its users with a premium entertainment experience.
The move comes on the heels of JioCinema’s deal with HBO and Warner Bros, which granted the platform exclusive streaming rights in India. JioCinema viewers will be able to catch HBO shows like Succession, House of The Dragon, The White Lotus, and Max Originals like And Just Like That… and Peacemaker. Plus, they will have access to Warner Bros.’s massive library, including Harry Potter, DC Universe movies, and Lord of the Rings.
AVOD and IPL’s Seasonal Audience
In a highly competitive and price-sensitive streaming landscape, where consumers are spoiled for choices, it becomes tempting for platforms to engage in a price war and offer everything for free to capture more customers.
Jio, with its decision to stream the Indian Premier League (IPL) for free, aimed to tap into a large audience and convert them into paid subscribers.
However, Jio was aware that this audience would likely be seasonal, with a high likelihood of churning once the IPL tournament concluded at the end of May 2023. For instance, users who primarily sought Tamil content would have better options on platforms like SunNXT and Aha, and they may have only installed the JioCinema app to watch the IPL. Consequently, these individuals are highly likely to churn at the end of the month.
Moreover, viewers have made no investment in JioCinema. They don’t need to pay or even register on the platform. They can open the app and start watching. While this provides a frictionless experience, it also means that JioCinema lacks a captive + invested viewer base for retargeting.
The question arises: How many of these seasonal customers will continue using JioCinema after the IPL?
Without a large number of customers consuming content, the advertising-only model will inevitably face challenges.
Industry experts had anticipated JioCinema’s shift towards a subscription-based model, especially after news of the HBO and Warner Bros deal came to light. The magnitude of this collaboration and the substantial licensing costs associated with securing streaming rights for highly popular content necessitated a transition to a subscription model.
This shift would help JioCinema generate a more sustainable revenue source and offset the investment in acquiring content from HBO and Warner Bros.
Impact on Users?
While the shift of JioCinema to a subscription model may not catch industry observers by surprise, it undeniably represents a significant change for its user base, who have grown accustomed to consuming content for free with occasional advertisements.
From Jio’s perspective, this move presents an opportunity to monetize premium content such as Hollywood movies, new releases, and in-house productions. There is also a clear indication of trial plans, with subscription fees coming into effect after the trial period ends.
Notably, there is no explicit mention on the subscription page that purchasing a subscription plan removes all advertisements. Additionally, upon closer examination of the “Terms of Use,” it becomes apparent that JioCinema has created leeway through legal language to introduce hybrid monetization methods when they deem appropriate.
Some and/ or all of the Subscription Plan(s) offered by Viacom18 may contain advertisements/ commercials included in the JioCinema Content.
Some JioCinema Content such as live sporting events/ shows and/or certain other kinds of premier content, when accessed, may show advertisements even where the Subscription Plan selected by You may be an advertisement free plan.
Viacom18 reserves the right to offer anytime in the future, various other kinds of Subscription Plans offering completely ad-free and/ or full access to various kinds of premier JioCinema Content, etc, all as determined by Viacom18 at its sole discretion, from time to time.
Viacom18 may, at its discretion, also offer some Subscription Plans that may start with a free trial period and in such cases, Viacom18 will charge the Subscription Fee for the next billing cycle as per the Subscription Plan chosen by You, at the end of the free trial period unless You cancel Your Subscription prior to the end of such free trial period.
These appear like a solid strategy, and I am glad they are moving to a hybrid (Ads + Subscription) model and charging a premium for premium content.
It’s important to consider that providing content for free or at heavily discounted rates may be feasible only in the short-term and not in the long run. OTT platforms incur significant costs in acquiring and producing high-quality content, securing licensing rights, and maintaining a robust streaming infrastructure.
Implementing a hybrid model helps ensure a sustainable ecosystem where content creators, platforms, and viewers can thrive together.
Krishna Rao Vijayanagar
Krishna Rao Vijayanagar, Ph.D., is the Editor-in-Chief of OTTVerse, a news portal covering tech and business news in the OTT industry.
With extensive experience in video encoding, streaming, analytics, monetization, end-to-end streaming, and more, Krishna has held multiple leadership roles in R&D, Engineering, and Product at companies such as Harmonic Inc., MediaMelon, and Airtel Digital. Krishna has published numerous articles and research papers and speaks at industry events to share his insights and perspectives on the fundamentals and the future of OTT streaming.
